Answer:
B. good for Jon but bad for Tony
Explanation:
Before he went to college, Jon bought a car from his brother Tony. They agreed that Jon would pay Tony $10,000 when Jon graduated from college. While Jon was at college, inflation was higher than expected. Thinking only about the car transaction, this unexpectedly high inflation was good for Jon but bad for Tony .
Generally, inflation favors borrowers and hurts lenders. Technically, Jon is owing Tony $10,000.
With an inflation rate of 5% the value of that money depreciates to 95% of its real value because inflation rate depletes the real rate of money and is the biggest factor of lose of monetary value.
The money that Jon will eventually pay Tony will be lesser in value which is good for Jon and bad for Tony.
